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March 30, 2023

FY 2022 Higher Education Sector Report Summary

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At the Board of Directors Meeting held on March 22nd, Management presented a review of its Higher Education Sector report, which included financial operating results for FY 2022 and market demand results for FY 2023. This sector report reviews the performance of the ten private institutions that comprise CHEFA’s higher education portfolio, consisting of 60 bond series with $4.93 billion outstanding.

Credit Outlook: All but one of the private institutions have a credit rating with one or more of the rating agencies. The current overall outlook of the higher education sector for the next 12-18 months by the rating agencies varies (Moody’s – Negative, S&P – Stable; and Fitch – deteriorating); however, all three rating agencies are seeing a bifurcation of the sector. All the rating agencies agree on key drivers of the sector’s outlook: declining enrollment, inflation, and the end of pandemic aid utilization to close gaps in operating budgets. The rating agencies agree that institutions with strong demand and solid resources will experience less credit stress and continue to fare well.

Market Demand: Most of the ten private Connecticut based institutions that make up CHEFA’s higher education portfolio have experienced increased market demand in FY 2023 across four key indicators: applications, selectivity, matriculation, and enrollment. Overall, total applications have increased 8.1% and total enrollment has increased 3.4% compared to FY 2022. Both total enrollment and applications at the ten private institutions are at their highest level over the past five years.

Key Financial Ratios: Due to market performance in FY 2022, total cash and investments for the ten private institutions declined 3.1% from the prior year. However, total cash and investments remain significantly higher than five years ago. Only four of the institutions had a total cash and investments to debt ratio of more than 2.0 times for FY 2022, compared to seven institutions in FY 2021.. The FY 2022 median monthly days cash on hand of 417 days declined 8.5% from the prior year but is at its second highest level over the past five years. FY 2022 individual medians of the private institutions varied significantly from a low of 83 days to a high of 768 days. The sector also saw improvements in the median net tuition revenue growth, of 7.7% in FY 2022, compared to -1.7% from the prior year. Only three institutions reported a decline in net tuition revenue from FY 2021 to FY 2022, compared to seven schools the prior year.

Total capital investment for the private institutions that make up CHEFA’s higher education portfolio, increased 19% from the prior year with 70% of the entire portfolio investing more in their plant than their annual depreciation expenses. Management expects, however, that capital spending will decline in FY 2023 due to fewer bond issuances, inflation and continued supply chain issues.

To learn more about CHEFA Higher Education Sector report for FY 2022 and the performance of ten private institutions that make up our higher education portfolio, please contact Michael Morris, Managing Director at